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Tuesday, July 16, 2019, 13:05
Europe braces for US$7b US tariff hit over Airbus dispute
By Bloomberg
Tuesday, July 16, 2019, 13:05 By Bloomberg

Europe expects the World Trade Organization to give the US the green light to hit the EU with tariffs aimed at products valued at between US$5 billion and US$7 billion in a 14-year dispute over illegal aircraft subsidies, according to two European government officials.

US President Donald Trump’s administration is waiting for the WTO to give its final decision on the damages caused by prohibited European aid for Airbus SE, after which the US would move immediately to impose the tariffs, said the officials, who asked not to be identified because the process is ongoing. The WTO could issue its ruling as soon as this summer.

The US is waiting for the WTO to issue its ruling, which could come as soon as this summer, before moving to impose the tariffs

In addition to helicopters and aircraft parts, the US tariffs may also be aimed at goods such as cheese, olives and pasta, along with some types of whiskey in what the officials see as an effort to gain concessions from EU members to the American agricultural sector. The measures would come on top of duties the US imposed on EU steel and aluminum exports a year ago over claims they posed a national-security threat.

ALSO READ: EU must speak up loud and clear against the US' unilateral moves

The office of the US Trade Representative previously estimated the EU subsidies to Airbus cause approximately US$11 billion in economic harm to the US annually. The EU has a similar case pending against Boeing Co and has already published a preliminary list of US goods — from ketchup to video-game consoles — being targeted in a US$12 billion plan for retaliatory levies.

While the EU has kept the door open to a settlement that would avoid tit-for-tat tariffs, EU Trade Commissioner Cecilia Malmstrom signaled earlier this month that she expected the duties to be imposed.

ALSO READ: US-EU talks struggle, threatening a new front in trade war

The simmering dispute threatens to push transatlantic relations to a new low and disrupt nascent negotiations launched a year ago to reach across-the-board cuts in industrial tariffs. The EU has also said it is prepared to hit 20 billion euros (US$22.5 billion) of US goods with tariffs if Trump follows through on a threat to impose duties on European cars and car parts.

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